Display Advertising Privacy

A common question that prospective and current Display advertisers is how can I granularly target an audience? Then once that bridge is crossed, what soon follows is questions related to the features and levers available, brand protection, ROI (return on investment) and increasingly user privacy.

A major reason there has been a shift to incorporate a Display Strategy into marketers online advertising plans is due to large amount of innovation that has taken place in recent years. New technologies and new ways of targeting users have emerged that have allowed particularly direct response advertisers to venture into a digital channel they had largely ignored in the past as they often viewed it solely being brand orientated

This has all manifested in explosive growth for the Display ad market as you can see in Figure 1 which is projected to be close to $10B in 2012 for the Non Premium Display segment. Non Premium Display refers to all ad inventory not bought on a guaranteed cost basis in advance of the media running. Overall now the entire Display market commands 38% of all online ad dollars according to a study by the Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC). Only Search with 46% has a greater share of online ad spend, however in 2010 Display ad spend is growing at twice the rate.

Figure 1: DISPLAY MARKET GROWTH
This has not all materialized out of thin air as this new Display eco-system, best illustrated by Terence Kawaja’s ubiquitous Display industry chart, has attracted enormous amounts of Venture Capital funding. Mr Kawaja himself 12 months ago estimated about $2.5B had gone into funding these companies and that number has certainly increased over the past year with many of those companies have gone through further rounds of capital raising. This figure also doesn’t probably account for Research and Development conducted by existing players like Yahoo, Google, etc. to innovate their own Display offerings. To put that $2.5B figure from early 2010 in perspective, that equates to about half of all Non Premium Display ad revenues of the prior year, 2009. Clearly a lot is at stake!

It is no coincidence that because of this rapid innovation and resulting advertiser spend, that the mainstream media and subsequently Washington has begun to take notice of the industry and its advertising practices. The Wall Street Journal has run an ongoing series titled “What They Know”, The New York Times has recently instituted a “Paywall” to their online content and Senators John McCain and John Kerry have introduced legislation around Digital Privacy all as a direct result of what has been happening in recent years.

I Am Confused, What Does All This Mean For My Privacy?

Well while no industry can claim to be perfect and there have always been unscrupulous players operating throughout the ages, the digital advertising industry has certainly come together in many positive ways as far as protecting user privacy is concerned.

When almost all technology and media companies who manage Display campaigns for advertisers target users or an audience segment, they are using non personally identifiable information (also known as PII). PII can refer to things like Social Security Number, Home Address, Phone Number, etc and generally encompasses anything that would clearly identify you as the web browser.

What is tracked is in an anonymous way via cookies, and includes things like the type of sites visited, ad clicks, search queries, etc. that allow an advertiser and their technology partner to show ads that are far more relevant to you. If you have been recently visiting travel sites like Expedia or Trip Advisor and searching for things like “Vegas Holiday Deals”, then ads that offer the cheapest hotels in and flights to Las Vegas might be of great interest to you rather than a ubiquitous ad for a TV sale. Advertisers will pay a premium for this type of audience targeting and this intern allows so many of your favorite News, Gaming, Social Networking and Video sites to remain free (or very low cost) to you.

To also put more control back into the hands of users;

– Web browsers like Firefox, Internet Explorer and Chrome have different types of new setting controls to manage your privacy settings

– Many ads have a little (i) icon at the top where you can get further information as to why you are being served that particular ad and with information about how to opt out

– Technology companies have Opt Out for users who no longer want to be served ads based on the companies tracking

– Companies like Evidon (formerly Better Advertising) who are a major part of the Industry Self Regulation have released free tools like Ghostery that allow a user to see exactly what companies are placing tracking cookies when they visit a given site

So a lot of capital and time has been committed by the industry at large to ensure the general online browsing public can feel at ease and take control themselves of their browsing experience. Ultimately most reputable advertisers and their advocates do not want to annoy or seem obtrusive to the public as that only diminishes their brand and customer perception. However by providing relevant content to a browser that they are more likely to be interested in allows, web sites and content publishers to continue to provide innovative web experience to all of us as the browsing public. As they can both recoup their costs and make a profit from the premium that advertisers are willing to pay.

Ultimately there is a lot of misinformation about digital marketing and audience tracking but it is important to reiterate that user privacy is taken very seriously by the Industry at large and I hope this information helps educate you further and clears up any misconceptions that you may have had.